The Salvadoran government loves Bitcoin, but what about Salvadorans? There aren’t that many. The openly Bitcoin-friendly country saw cryptocurrency payments plummet in 2023, despite soaring prices and massive government efforts to promote it.
The amount of money sent by Salvadorans living abroad to relatives back home (known as “remesas” or remittances) plummeted to $82.93 million from $116.4 million in 2022, the highest amount on record, according to El Salvador’s central bank. It was in contrast. Family remittances in all forms amounted to $8,181.8 million, an increase of 4.6% year-on-year.
According to official statistics, cryptocurrency remittances by Salvadoran citizens decreased by more than $30 million compared to the previous year, with only 1% of total remittances sent in cryptocurrencies throughout 2023. This ratio is even worse than the 1.7% recorded in 2022.
Under the leadership of President Nayib Boucle, El Salvador has partnered with Bitcoin advocates such as Max Keizer, Jacques Mallars, and Saifeddine Amous, as well as major exchanges such as Binance and Bitfinex. It has been engaged in an aggressive campaign to incorporate Bitcoin into the country’s financial structure.
Despite these high-profile partnerships and the country’s status as the first to declare Bitcoin as legal tender, public support for Bitcoin remains lukewarm. Recent studies show that 88% of the population will not be using cryptocurrencies in 2023, and interest in cryptocurrencies appears to be declining over time.
The Bukele government’s monetary policy, especially regarding Bitcoin, is shrouded in secrecy and controversy. Bitcoin purchasing methodologies, the country’s actual Bitcoin holdings, and wallet addresses remain private, raising questions about transparency and accountability in the country’s cryptocurrency efforts.
These practices have only served to heat up the country’s political ecosystem, which is now an authoritarian one where Bukele controls the government, parliament, courts and all other political institutions. It has a unique atmosphere. Further complicating the situation, Mr. Bukele’s governance has been disrupted by measures such as extending his presidential term beyond the constitutionally allowed period and imposing an indefinite state of emergency to combat gang activity. is a controversial move.
These actions, coupled with the hasty process of Bitcoin adoption, highlight a style of governance that prioritizes quick action at the expense of deliberation and transparency.
The contradictions in El Salvador’s remittance situation are clear. The country has seen significant growth in traditional banking channels and alternative remittance methods. Indeed, central bank data reveals a diverse and robust remittance ecosystem, challenging the narrative that Bitcoin will revolutionize the way Salvadorans receive money from abroad.
Despite its pioneering role in Bitcoin adoption, El Salvador remains essentially alone on the world stage. Efforts by other countries, such as the Central African Republic, to declare Bitcoin as legal tender failed shortly after they began.
Venezuela, another politically turbulent country, has also legalized the use of cryptocurrencies as a means of payment, but the country’s official token is at risk of closure. Cryptocurrency adoption in the country has sharply declined in recent years after the government lifted restrictions on the dollar, effectively pegging the official rate to the black market rate.
Edited by Ryan Ozawa.